Rollover

For high-income earners, backdoor Roth IRA contributions are a powerful way to build tax-free retirement savings. On a separate note, rolling over an old 401(k) into an IRA can also be a smart move for better investment options and lower fees. However, when these two strategies intersect, the outcome can either work in your favor—or create an unexpected tax bill. Understanding why is critical before making a move.

An In-Service Rollover Might Be Right for You Suppose you ever left an employer with a retirement plan you contributed to. In that case, you probably have been given information on how to rollover your old employer’s plan to another eligible retirement plan, like an IRA. A rollover occurs when you withdraw funds from an eligible retirement plan, like a 401(k), to another eligible retirement plan, like another 401(k) or an IRA, within 60 days. This typically occurs when you leave an employer,...

You recently left an employer where you were contributing to their 401(k), 403(b), or some other qualified retirement plan. Now what? This article will outline your options and point out some pros and cons of each option. Option 1: Leave the funds in the former employer’s plan You can leave your savings in the old plan if its terms allow it. While most plans will let you do this, that is not always true. Many plans will automatically roll your savings into an IRA if it is under a certain...